SHELLS’ RISK MANAGEMENT STRATEGY KENNETH MARENGA 137744 KEL AMBROSE 138680 MOHAMMED GALADIMA 128142

OVERVIEW Introduction What is risk management? Who is shell? How does shells’ programs relate with risk management? Shells Risk management Strategies. Conclusion Questions, reactions, comments.

INTRODUCTION The situation of todays’ world pose a lot of risks in mans everyday endeavor. This gives rise to thoughts about the steps to take in order to properly handles an manage these risks.

Risk management strategy (RMS) Risk management roadmap (RMR) Risk management plan (RMP) Crisis management Other essential tools and strategies included

WHAT IS RISK MANAGEMENT? Risk management is the systematic process of understanding, evaluating and addressing these risks to maximize the chances of objectives being achieved and ensuring organizations, individuals and communities are sustainable. It also refers to the logical development and implementation of a plan to deal with potential losses.

Risk management staff is responsible of bringing in strategies to deal with potential losses. Strategies being the essential tools of mitigating or obliterating the potential losses prior to their occurrence. This helps in corporation overall loss reduction due to planning of both seen and unforeseen circumstances which can cripple the viability of the firm.

Shell corporation. Shell corporation is a global group of energy and petrochemical companies. The headquarters are in Hague, the Netherlands. The parent company of shell group is Royal Dutch Shell plc, which is incorporated in England and Wales. Shell has an average number of 94000 employees world wide and operates in more than 70 countries with more than 43000 shell service stations in operation. Shell products include fuel, oil and card services as well as exploration, production and refining of petroleum products.

Shell focuses on a series of strategic themes, each requiring distinctive technologies and risk management. These include; Downstream engine Upstream engine Integrated gas Deep waters Resource plays Future opportunities

Downstream refines, supplies, trades and ships crude worldwide, manufactures and markets a range of products and produces petrochemicals for various industrial customers. The RMS will be focusing on each and every stage undertaken until to the final part of the pattern which is the customer. RM will develop and execute plans to mitigate and or eradicate any potential loss in the stages. The need for service and check up to remove for example outdated refining equipment in order to curter for any jeopardy of loss in refining process. Also RM will look onto any hazardous conditions if there may be any signs in the shipment of crude oil to different customers.

Marketing and distribution of products from the crude oil and gas is also part of the downstream, hence RM is essential in loss prevention associated with the marketing of the products. When distributing the products, a lot of perils might be there like when transporting oil. Extra caution is always needed, for example to see hazardous conditions like bad weather that may result in total or partial loss. Also when doing the marketing, there is a need for financial risk manager to partake all risk in loss of money, that is to see weather the marketing strategy is not ending up just dwindling money and leave the corporation in deep financial crisis.

Upstream explores for and extracts crude oil and natural gas. This sector is widely known as the exploration and the production sector Stages within the upstream petroleum product industry include the search for underground or underwater oil and gas fields, the drilling of the exploratory wells, and if the wells are deemed economically viable and recoverable, the operation of the wells that bring crude oil and natural gas to the well’s surface. The first step is to locate, test and drill for oil and gas and later once wants reserves are proven, upstream firms will extract any oil and gas from the reserve.

The RMS here will engage with the loss control engineers to ensure that losses arising from things like the environmental pollution and employee injuries during the exploration and extraction phase are mitigated and or halted before occurrence. When drilling and laying the pipelines an extra caution is needed in regard to the above loss possibilities. Consideration of geology and local environment to carefully select of the environment under which the work is to be undertaken. Single wells or survey wells are built during the exploration phase, this is so to understand gas or oil in the area hence focusing on the exact area of production and mitigate losses that may arise to lake of better know how on the area of work.

Risk management outlook

Pro active risk management

Shell process safety initiatives target

Integrated oil and gas refers to the engagement in the exploration , production, refinement and distribution of oil and gas. Shell an integrated organization usually organizes its different tasks and operations into categories upstream and downstream. Integrated gas and oil is one of the strategic themes provide mid term growth and as expected in the forecast of shell is for it to become core engine in the future. This helps also providing enough reserves to cater for crisis management. The unforeseen and major unpredictable events that threatens to harm the organization’s stakeholders etc.

Risk management roadmap deals with plans to achieve goals set and also determining future loss causes and try to put measures to navigate through or measures to obliterate them prior their occurrence. this makes an organization to therefore survive losses that will be expected on the roadmap and dealt with before occurrence. In downstream, upstream and integrated gas and oil. It is essential to have a roadmap to ensure viability and continuity. Plan for instance might be mitigating the risk of price fluctuations.

Crude oil prices from 2000-2012

To mitigate the risk of price fluctuations, one of Shell’s solutions is use of fixed price risk management. A price mechanism that is aimed to offer contractors greater stability(compared to variable pricing) when it comes to budget planning. Benefits of shell bitumen fixed risk management include; help contractors to plan projects budgets more accurately Help contractors have a higher priority of supply of high quality shell bitumen product. Fixed prices risk management focuses on offering greater price stability thereby helping contractors better control their project costs.

Some strategies for future expansion of shell The main Shell focus in renewables continues to be biofuels, which sit in the Downstream Engine Shell has been involved in distributing biofuels for over 30 years. In 2011 it started producing biofuels. With Brazilian company, Cosan, it formed a new company called Raízen. With annual production capacity of about 2.2 billion liters, the JV is one of the world’s largest ethanol producers. Brazilian sugar cane ethanol is one of the most sustainable Biofuels available on the market today. It also produces around 70% lower CO2 than conventional gasoline

SUMMARY AND CONCLUSION in shell two “engines” are the upstream engine and the downstream engine. These “engines” deliver the bulk of its cash, and expected is them to be the financial foundation at least through this decade. The need to continue to invest in them to remain strong There are two main “growth priorities”: integrated gas and deep-water These will provide our medium-term growth and we expect them to become engines in the future. As Shell intend to increase energy production over the coming years, Shell maintains a sharp focus on managing the footprint of its operations, particularly with regards to CO2 emissions and water use, while working closely with local communities.